Brokerage Firm`s Fate Awaiting Results Of Examination By Sec

The fate of the brokerage firm Bevill Bresler & Schulman Government Securities hung in the balance Tuesday after several affiliated firms entered Chapter 11 bankruptcy proceedings.

``The brokerage firm is still in business,`` Securities and Exchange Commission regional administrator Ira Sorkin said Tuesday evening. ``We are in the process now of examining its books and records.``

Sorkin said he would ask a federal judge to put the brokerage subsidiary in receivership only ``if we find some securities laws have been violated.``

The brokerage firm, which sold government securities to 25,000 clients nationwide, has offices in Fort Lauderdale and Palm Beach. The status of those customer accounts is unclear since Bevill Bresler officials have declined comment.

On Monday, Bevill Bresler & Schulman Asset Management Corp. of Livingston, N.J., and several affiliated firms said they had filed for protection under Chapter 11 of the Federal Bankruptcy Act, which allows a company to reorganize through negotiations with creditors. SEC officials said the asset management firm, a government securities dealer, could have a deficit of more than $190 million.

Sorkin alleged in court papers that the asset management firm engaged in a fraud in that customers of the firm thought they were dealing with the regulated brokerage firm, when in fact they were dealing with an unregulated securities dealer.

At a hearing in federal court in Newark Tuesday, U.S. District Judge Dickinson Debevoise froze the assets of Bevill Bresler & Schulman Asset Management Corp. and three affiliated firms at the request of the SEC. Only the brokerage firm was unaffected.

In a separate matter, Debevoise denied a request by Security Pacific and Manufacturers Hanover Trust to liquidate securities they held for the asset management firm.

Randall Brelsford, of Security Pacific Clearing and Services Corp. in New York, said the asset management firm owes Security Pacific about $30 million, while the brokerage subsidiary has a slight surplus in its account.

Brelsford said the $30 million that the asset management firm owes is fully collateralized by securities held by Security Pacific. Asked if any of those securities could actually belong to customers of the Bevill Bresler brokerage subsidiary, Brelsford said there is no way of knowing as they are in ``street name.``

That simply means they are in a Bevill Bresler account at Security Pacific, and only Bevill Bresler knows which of its customers owns the securities.

Advertisements for the Bevill Bresler brokerage subsidiary say it is a member of the Securities Investor Protection Corp., which insures securities up to $500,000 and cash up to $100,000.

Meanwhile, the collapse of the asset management firm is still under investigation. The firm owes 61 creditors -- most of them savings and loans -- an estimated $190 million more than it can pay, according to the SEC`s Sorkin.

The firm`s failure comes in the wake of the closing last month of a Fort Lauderdale government securities dealer, ESM, which owes customers about $315 million more than it can pay.